FreightWaves has reported that investors
are still bullish on the digital freight business and the newly released
numbers seem to validate their sentiment. Research firm Armstrong &
Associates estimated the domestic transportation management market generated
$86.5 billion in revenue this past year. And
a growing percentage of that yearly revenue number comes from newly created
digital platforms.
Seattle-based Convoy, which touts
itself as the most efficient digital freight network, is still leading the pack
as far as independent digital freight brokers go. Started in 2015, the company is
already valued at $2.75 billion. Initially spurred by investment from some of
Silicon Valley’s biggest hitters, the company has raised funds at a dizzying
pace. Big name investors such as Jeff Bezos (whose Amazon has gone on to build
its own digital freight brokerage platform as FreightWaves was the first to
report), Salesforce CEO Marc Benioff, and even rock stars Bono and the Edge
from the band U2, continued to finance the company through its next several
rounds.
And now in a Series D funding round
led by Al Gore’s Generation Investment Management, Convoy has raised an additional
$400 million. The company has now raised more than $668 million since its
founding. The most recent round of investment brings the company’s valuation to
over $2.75 billion, firmly cementing its status as a unicorn.
Another West Coast disrupter is San
Francisco-based Flexport. The freight forwarder raised an additional $1 billion
in funding earlier this year. The company’s sixth round of funding was led by SoftBank
Vision Fund. The fresh investment brought Flexport’s total amount of capital
raised to over $1.3 billion and gave the company a post-money valuation of over
$3.2 billion. Its 2018 revenues of $471 million represent an increase of 110% over
its 2017 revenues of $225 million.
And then, of course, there’s Uber
Freight. Earlier this year Uber Freight’s parent company, Uber Technologies,
announced that it will invest $200 million annually into its freight management
business. During the same announcement the company said that it will move Uber
Freight from San Francisco to the trucking hotbed of Chicago in order to more
fully commit to the industry. Uber Freight is planning to staff the Chicago
office with over 2,000 employees.
It remains to be seen exactly how
much of a threat these startups pose to traditional freight brokerage, freight
forwarding, and other logistics management firms. But whatever the challenge
is, the traditional logistics management firms are not going down without a
fight. Companies from across the supply chain spectrum have responded with initiatives
to reduce internal inefficiencies and increase their technological footprint.
For instance, as FreightWaves
reported earlier this year, the largest player in the field, C.H. Robinson, is
doing everything it can to cut costs, which it is doing quite effectively. With
the money that it saves the company has vowed to double its spending on
technological developments that will help to allow it to compete effectively with
the newcomers.
But regardless of the outcome of the
battle for supply chain supremacy, the outpouring of venture capital into the
new breed of logistics firms is a good indicator that digital freight
management is in it for the long haul.
